Carriers and tower companies are expected to invest $34-$35 billion per year in wireless infrastructure through 2017, and that investment will create alomst 1.5 million new jobs. Those numbers come from a report commissioned by PCIA The Wireless Infrastructure Association, authored by a former FCC chief economist and two of his longtime associates in the wireless industry.
“What we found is that wireless broadband is an enabling technology much like the electricity or the railroad,” said report author Rich Carlson. “Investments have a bigger-than-expected impact because they create the avenue for other economic actors to create economic value once the enabling technology expands and reaches a critical mass.” Carlson said the wireless industry “punches above its weight” in terms of the job creation and GDP growth associated with each dollar invested. He and his fellow authors project that the roughly $180 billion of infrastructure investment expected during the next five years will add $1.2 trillion to the U.S. economy.
Job creation
Economists who have studied the impact of wireless broadband investment on job creation describe four different ways that carrier and tower company spending drives job growth. Direct job creation occurs when people are hired to design and build cell sites. Indirect job creation occurs both upstream and downstream from this activity. For example, spending by network operators can drive growth for the equipment vendors who supply the network and for the device manufacturers who may see increased demand for handsets and tablets. The third impact on employment is called the induced impact. This refers to job growth in areas outside the wireless ecosystem and it occurs as income earned by workers in the wireless industries is spent throughout the economy, creating more demand and more jobs.
The most significant type of job creation attributed to wireless infrastructure spending is the fourth category: new jobs created by what economists call the network effect. They are referring to the jobs created as mobile broadband creates new opportunities for existing businesses, and inspires the launch of completely new businesses. The authors of the PCIA report singled out M2M, mobile payments, and mobile entertainment as three particularly promising areas.
“These indirect network benefits of offering improved wireless broadband access and higher data speeds will lead to a plethora of new business formation, while existing businesses and organizations will reap sizable gains in efficiency as they identify new sources of revenue by obtaining and exploiting access to machine-to-machine (M2M), mobile payments, and other productivity-enhancing applications and services,” said Rich Carlson. “Indeed, the indirect impacts will add between 1.42% on the low end and 1.69% on the high end in GDP, representing a range of $225 billion and $268 billion of increased economic activity [per year].”
Carlson and his fellow authors estimate that this year the wireless infrastructure industry is creating 26,777 net new jobs. Indirect and induced job creation is expected to represent an additional 82,027 jobs. And 194,937 more “innovation-related” jobs are expected due to the network effect. Carlson notes that these are net new jobs created, meaning that the numbers include job losses due to increased efficiencies that can result from access to high-speed wireless broadband.
A dip next year
The economists project a dip in hiring next year and do not expect to see hiring hit 2013 levels again until 2017. The wireless infrastructure industry is expected to hire 20,982 people next year, creating 64,274 indirect and induced jobs and 152,747 innovation-related jobs. The numbers do not return to 2013 levels until 2017, when the industry is expected to hire 28,436 workers, creating 87,110 indirect and induced jobs and 207,016 innovation-related jobs.
These projections reflect the expected completion of LTE rollouts by the nation’s two largest carriers, Verizon Wireless and AT&T. Sprint and T-Mobile US are not expected to complete their LTE builds in the near future, but they account for less overall spending. The economists who authored the PCIA report derived their estimates from the public reports of wireless carriers and tower companies. They used spending projections for North America and tried to eliminate estimated investment in Canada.
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